--ADDS BROKER COMMENT--
Falcon Oil & Gas (LON:FOG, CVE:FO) is to receive US$3.7mln from former partner Naftna Industrija Srbije (NIS).
NIS, which is part owned by Gazprom, agreed to pay the money in fulfilment of its contractual obligations to a project in Hungary’s Mako Trough, Falcon said in a statement.
A termination agreement has now been signed for an oilfield services contract, which the companies previously entered into in 2013.
NIS drilled two of three wells agreed in the contract. Falcon had previously granted extensions to the deadline for the proposed project.
Falcon retains a 100% interest in the Mako Trough Licence in Hungary.
“This will serve to boost the company’s already stable cash position as it looks to progress its carried drilling programme in Australia,” said Sam Wahab, analyst at broker Cantor Fitzgerald.
Meanwhile, finnCap analyst Dougie Youngson said: “This situation has been ongoing for some considerable time so this is a positive outcome for Falcon and helps to strengthen its balance sheet.”